Clash Over Energy Crisis

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Clash Over Energy Crisis

WASHINGTON – Democrats and Republicans clashed on Wednesday over one of the more politically charged issues in the United States – how to halt skyrocketing electricity prices and power shortages in western states that threaten to shake the national economy.

With Democrats emboldened by their new majority status in the Senate, they have wasted no time raising the profile of a chaotic energy situation in California stemming from that state's failed electricity deregulation law.

The Senate Governmental Affairs Committee, now chaired by former Democratic vice presidential candidate Joseph Lieberman, heard from a panel of economists Wednesday. Most advocated a tougher federal role in slowing wholesale price rises until more generating capacity is available in 2003 and 2004.

Lieberman, saying California's energy market is "not even functional," warned, "If the federal government doesn't step in and provide temporary price relief, the natural trend toward deregulation will come to a halt."

Bush and many Republicans adamantly oppose any price caps on wholesale electricity, saying they would discourage the construction of new generating plants. Republicans also are skeptical that the price caps would be temporary.

Arguing against price caps Wednesday, Tennessee Sen. Fred Thompson, the senior Republican on the Senate panel, cited President Richard Nixon's wage and price controls, 1970s-era oil price constraints and New York City rent controls as "temporary fixes that lasted far longer than intended and actually did more harm than good."

Next week, the panel will quiz all five Federal Energy Davis.

While the committee's work is purely oversight in nature, Democrats are hoping the testimony helps propel legislation scheduled to move through the Senate Energy Committee in coming weeks. That measure would impose federal price caps on wholesale electricity in California and other western states until March 2003.

Passage of such a bill would put Democrats on a collision course with President Bush and many Republicans, who staunchly oppose price caps.

AN EYE ON 2002 ELECTIONS

Bush made energy a centerpiece of his 2000 presidential campaign with allegations that Democrats failed to devise a national strategy for coping with increasing demand and over-reliance on foreign oil.

Now, Democrats are attempting to claim the issue as their own, blaming Bush and the Republican-dominated FERC for refusing to cap runaway electricity and natural gas prices in California, the most populous state.

Mark Nevins, spokesman for the Democratic Congressional Campaign Committee, said television ads aired last month in the Los Angeles area criticizing Republican Rep. Steve Horn's energy record were part of a wider campaign ahead of the 2002 congressional elections.

Nevins said the DCCC sees Horn and fellow Republican Rep. Doug Ose as vulnerable on energy issues. Defeating those two California congressmen would go a long way in capturing five more House seats Democrats now need to achieve a majority in the House of Representatives, he said.

In testimony before the Senate Governmental Affairs Committee, economist Alfred Kahn called for temporary caps on wholesale electricity prices in California.

Kahn, the father of U.S. airline deregulation in the 1970s, called for putting the brakes on California's electricity deregulation until the supply situation there brightens.

"Unregulated markets don't work very well," when "extreme" supply and demand problems are plaguing an industry, as is the case now in California's electricity sector, Kahn said.

Kahn said any temporary price curbs should be phased out within "two or three years" after California's generating capacity is improved.

Severin Borenstein, an economist and director of the University of California Energy Institute, criticized FERC's handling of the western states' energy problems. He told the Senate panel that "short-term price caps can be implemented in a way" that will ease chaos in the market without discouraging additional production and investment.